Allegheny Technologies Incorporated’s (ATI - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive investment option.
What Makes ATI an Attractive Pick?
An Outperformer: Allegheny has outperformed the industry it belongs to over the past year. The company’s shares have shot up 40.3% compared with roughly 34.8% growth recorded by the industry.
Estimates Moving Up: Annual estimates for Allegheny have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 14.5% to $1.58 per share. The Zacks Consensus Estimate for 2019 has also moved up 4.9% over the same timeframe to $2.14.
Positive Surprise History: Allegheny has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 42.7%.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Allegheny is currently pegged at $1.58, reflecting an expected year-over-year growth of a whopping 229.2%. Moreover, earnings are expected to register a 35.6% growth in 2019.
Upbeat Outlook: Allegheny, in its second-quarter earnings call, noted that it continues to expect year-over-year growth in operating margin and revenues in its High Performance Materials & Components (HPMC) division in the second half of 2018 on the back of improved asset utilization and growth in aerospace market demand.
Allegheny also expects strong end-market demand in the Flat-Rolled Products (FRP) unit to continue and benefit from current operational improvements. It also anticipates growth in differentiated products and benefits from the A&T Stainless joint venture (JV).
Moreover, the company reiterated that it anticipates a strong second-half cash generation with at least $150 million of free cash flow for 2018, which excludes contributions to the ATI Pension Plan.
Allegheny’s JV with Tsingshan Group Company will also offer cost competitive stainless sheet products made for the North American market through a unique combination of Allegheny’s innovative, low-cost Hot-Rolling and Processing Facility (HRPF) and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, and the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
The JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Ingevity Corporation (NGVT - Free Report) , Huntsman Corporation (HUN - Free Report) and Celanese Corporation (CE - Free Report) each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth rate of 12%. The company’s shares have rallied around 76% in a year.
Huntsman has an expected long-term earnings growth rate of 8.5%. The company’s shares have rallied around 25% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have shot up roughly 19% over a year.
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